Should I have to pay taxes on a 1099-NEC that has "non employee compensation" from a student loan credit disbursement and Cares Act distribution?

Forum|Forum|5 years ago
March 22, 2021
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TurboTax Self Employed Online

JohnB5677

When a student loan is forgiven, you don’t have to pay the debt back. However, in most cases, the forgiven balance could then be considered money you received as a benefit, making it taxable income.

To avoid also be subject to self-employment tax, I suggest you post it using these guidelines.

Wages & Income
1099 MISC and Other Common Income
Select Income from a 1099-NEC
Enter payer's name
EIN Number
Amount you received
State what it was for
Click None of these apply
No you do not have expenses to enter

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IveBeenDupedByTurb0t4x

None of these apply is no longer an option. We received additional forgiveness from the TX Higher Education Fund for teaching a low-income school for 5+ years. They classified this as a 1099-NEC. We are not self-employed.

AmyC

Employee

The new rules have your student loan forgiven with no tax implications through 2025. You will need to report it, since you received the form and then subtract the income back out. The program and worksheets are just that, we need your actual tax return to be correct. Follow these steps:

Step 1:

Report the NEC

Open your return to the federal income section
Enter the 1099-NEC into the program
describe the reason, continue
Uncommon situations, select from sporadic activity or hobby to get this reported correctly on the tax forms, continue

Step 2:

Subtract the income from your return